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Indian stocks, railway budget & more...

Asian stock market indices are trading strong currently, with major gains seen in shares trading in Hong Kong, China and Singapore. These markets have seemingly taken cues from the US indices that closed in the positive yesterday. Gains in the US markets, for third day in a row, were despite concerns regarding continued problems in the housing market, rising inflation and weakening consumer confidence. On the other hand, the dollar continued its weak run against major currencies like the Euro, largely in anticipation of a further rate cut by the Federal Reserve in its next monetary policy meeting.

Indian stock market, in the meanwhile, continue to trade amidst caution. With valuations across sectors remaining fair (even after the recent meltdown), participants seem a little jittery, as seen from investment data of FIIs and domestic mutual funds. As a matter of fact, FIIs have sold a net of US$ 440 m in the month of February, after selling a net of US$ 3.2 bn in January.

Train travel is set to become cheaper, as the Indian railway minister has announced a slew of discounts to take on competition from the low cost airlines. In his budget speech yesterday, which was his fifth in a row, emphasis was laid on improvement in the railway infrastructure as well as ways to tackle competition for freight from roadways. The minister began by reciting the following words - "Sab kah rahe hain humne gazab kaam kiya hai. Karoron ka munafa har ek shaam diya hai. Phal salon yeh ab dega, paudha jo lagaya hai. Sewa ka, samarpan ka, har farz nibhaya hai." (Everyone is saying that we have done a wonderful job. We have been highly profitable with each passing year. The seed we have sowed shall reap fruits for years to come. We have dutifully practiced the virtues of caring and dedication).

The Indian railways have surely been a turnaround story, as seen from the performance over the past few years. A leading business newspaper reported today that it is the only ministry of the central government that meets all its expenses through own revenues. This could well be an example for all other central and state ministries, which have bloated budgets to meet expenditure that are wasteful at so many times. Interestingly, the central government's interest payments are greater than the incremental debt it assumes each year. This is one issue that the finance ministry needs to tackle before things go out of hand. Strong economic growth of the last 5 years has hidden many discrepancies in the government's fiscal management. Any economic slowdown might well bring the cat out of the bag!

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